Before you set the wheels of operation in motion, you must complete two critical groundwork steps: writing a business plan, and recruiting your board members.
The business plan serves several vital needs:
- It helps you clarify what the task ahead is going to look like, forcing you to think about resources, not just vision.
- It helps you recruit effective board members by showing them that you have minimized surprises and thought through operational challenges.
- It gathers all the information required when you apply to the IRS for recognition of tax-exempt status (Form 1023).
We recommend that the business plan for a typical charity be about 12 to 20 pages long. It should have seven essential sections:
1. The Executive Summary
Write this last, and keep it to one page. This is your opportunity to sell the reader on how great the new charity is going to be—showing passion for why the charity is necessary, what it will accomplish, and how it will do so.
2. Describe the Challenge
State the precise social or community need you are addressing. Use data, local statistics, and clear observations to define the problem.
3. The Proposed Solution (The Program)
Describe your programs in detail. What will your staff actually do on a Tuesday morning to address the challenge? Who are the beneficiaries, and how do they access your services?
4. Market and Competitor Analysis
Who else is working in this space? Explain why your approach is unique, or how you will collaborate with or supplement existing agencies rather than duplicating effort.
5. Management and Governance
Introduce your founder, key staff, and board of directors. Show that you have the right mix of passion and management skills (e.g., finance, legal, programmatic) to execute the plan.
6. Marketing and Fundraising Plan
How will donors find you? Detail your fundraising mix: individual gifts, major donors, foundation grants, corporate sponsorships, or fee-for-service program revenue.
7. Three-Year Financial Projections
Provide a detailed spreadsheet showing projected revenues and expenses for the first three years. Be realistic. If you expect to raise $100,000, do not budget $150,000 in salaries.